Debt collection, whilst it can be effectively managed, is a business problem and can seriously hold up cash flow whilst the money you need is being recovered.
The ideal scenario is to NOT let your business finances deteriorate to this level by implementing some effective business strategies, including talking to a debtors insurance expert.
You are vulnerable when you have an interrupted cash flow so an effective debtors control system is essential as part of your financial management.
Generally in Australia debtors are often allowed more than 54 days to pay their debts that are outstanding. What this means to a business owner is that they are only operating with approximately half of the cash flow that they really should have. This is close to double the 30 days that most business use for everyday trading. One of the things that you can do is understand the number of debtor’s days that are outstanding every month to ensure that you understand the effect that debtors are having on your businesses cash flow.
You can also use the following steps to help reduce the amount that is owed to you or at least help to recover money if it becomes outstanding:
- Confirm all payment arrangements with debtor’s in writing
- Be proactive and contact clients so that payments are made by the due date
- If companies are private get guarantees from the directors
- Resolve any client queries quickly
- Don’t hold onto outstanding debts refer them promptly to a debt recovery agency
We are the experts on debtor and cash flow management and at Niche Trade Credit we have a broad range of services that can take care this area of your business for you before it becomes a headache.
Remember that credit and debtors insurance is essential for any business in case there are debts, especially large ones, that cannot be recovered and let us do the hard work for you while you focus on growing your business.
To talk to our credit and debtors insurance experts in Sydney, call us on 1300 574 771.